Finn Poschmann is chief executive officer of the Atlantic Provinces Economic Council.
Two Fridays ago, the U.S. Bureau of Labour Statistics (BLS) produced an employment report that not only undershot, by far, all analysts' expectations, it revised downward prior employment growth estimates. The following Monday was an unhappily bouncy day on the markets. Let's look beyond those numbers.
After a long lag, U.S. resale housing prices are generally near their prebust (2007) levels, which is a pretty good indicator of household sentiment. Housing starts, though, are more directly relevant to us. After a 79-per-cent drop leading into the U.S. recession, they have now crept back to a safer 50 per cent of the prior bubbly rate. And this has softwood lumber producers in British Columbia, Quebec, and the Atlantic provinces in a sweeter spot: high demand, a favourable dollar and an at least temporary lull in trade actions.
This positive employment scenario could take a blow if Canada bends on a new softwood lumber agreement – but so far, so good; our workers' allies are the U.S. home builders. And then there is the energy commodity industry. The sector dominates Canada's exports to the United States, and the United States is even more central a market for Atlantic Canada's energy producers. Our friends there are the U.S. chemical and petroleum product producers and consumers, and the fact that prices have firmed in the past few months is good news.
But what about those job-market numbers? This is where another BLS survey is handy. The Job Openings and Labour Turnover Survey (JOLTS) is the coolest market survey nobody reports on, and last Wednesday's release was a typical report: nearly six million job openings – the Canadian counterpart would be about 350,000.
The underlying churn reveals that country's dynamism: Hires run at a rate above five million a month. Offsetting that, of course, are numbers of similar size for layoffs, quits, and retirements – otherwise called separations. And, in the United States as of June 8, hires have exceeded separations for 73 months, which has led many analysts to promptly switch from wondering when U.S. growth was going to start to worrying about whether the growth phase is getting long in the tooth.
Now, Canada had a shorter recession than did the United States. We don't have an equivalent of the JOLTS, but the top-line record is pretty good. On an annual basis, Canada has had six consecutive years of employment growth, at an average rate of 1.3 per cent. The leaders have been Alberta and Newfoundland and Labrador, with New Brunswick and Prince Edward Island the laggards.
This is a rose-tinted perspective. Beneath the data lie some household financial insecurities. Not all of those new hires were at wage rates that matched or exceeded workers' prior wages. There are discouraged workers, and in the Western world, those who find themselves on permanent disability claims have been rising in number. And as other writers have also noted, perhaps half of U.S. households would have trouble meeting a small unexpected expenditure without borrowing money or selling something. Canadian data hint at a similar phenomenon.
What to do? Governments are limited in what they can do about overall market performance, and they don't have a good record when they've tried. While they can provide financial and transitional supports to those among us who have been dislocated by global trade winds, they need to think over the longer term to make investments that help us be more competitive in the face of pressure from places where labour costs less.
That means less emphasis on building arenas and convention centres, and more on the quality of primary and secondary education, especially in Canada's east. This is a really long-term investment, and the great thing about is that it doesn't take much money, or more teachers; rather, it takes a curriculum that focuses on basic reading and arithmetic skills, and an insistence that students meet high performance standards for which teachers and school boards are accountable.
Financial security is a tougher one; financial education is never going to go far in addressing the fact that many people have powerful desires – or crushing family needs – to spend money now, at the risk of what happens next month.
For instance, job-market volatility may be one reason for the burgeoning payday loan business, which has caught the eye of state regulators in the United States, as well as the new U.S. federal Consumer Financial Protection Bureau and provincial regulators in Canada. And it poses a quandary. Payday lending worries regulators, for they fear that clients get caught in expensive debt traps. Yet regulatory moves to squeeze the industry could leave their clients high and dry: This suggests the need for a careful balancing act on this emerging regulatory front.
Doing better than okay in constantly changing labour markets takes brains and planning more than anything else. And it takes time. Meanwhile, don't count out the United States' stunningly dynamic marketplace.
Editor's note: An earlier version of this article incorrectly said the Consumer Financial Protection Bureau is a Canadian body. In fact, it is American.